Bank Deposit Contracts Versus Financial Market Participation in Emerging Economies
The financial sector of emerging economies in Africa is characterized by a non-competitive banking sector which dominates any direct participation of agents in asset markets. Based on a variant of Diamond and Dybvig's (1983) model of financial intermediation, we formally explain both stylized facts through market inexperience of agents in emerging economies. While experienced agents correctly predict future market clearing equilibrium prices, inexperienced agents are ignorant about future market equilibria. As a consequence, a monopolistic banking sector can exploit these agents because their only outside option is an autarkic investment project.
|Date of creation:||Jul 2013|
|Date of revision:|
|Contact details of provider:|| Postal: PRETORIA, 0002|
Phone: (+2712) 420 2413
Fax: (+2712) 362-5207
Web page: http://www.up.ac.za/economics
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Zimper Alexander, 2006. "Assessing the Likelihood of Panic-Based Bank Runs," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 6(1), pages 1-19, December.
- Reinhart, Carmen & Tokatlidis, Ioannis, 2005.
"Before and After Financial Liberalization,"
6986, University Library of Munich, Germany.
- Olu Ajakaiye & Mthuli Ncube & Jacqueline Macakiage, 0. "Services and Economic Development in Africa: An Overview," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 16(suppl_1), pages -12.
- Alexander Zimper, 2013.
"Optimal Liquidity Provision Through a Demand Deposit Scheme: The Jacklin Critique Revisited,"
German Economic Review,
Verein für Socialpolitik, vol. 14(1), pages 89-107, 02.
- Alexander Zimper, 2011. "Optimal liquidity provision through a demand deposit scheme: The Jacklin critique revisited," Working Papers 208, Economic Research Southern Africa.
- Eichberger, Jurgen & Harper, Ian R., 1997. "Financial Economics," OUP Catalogue, Oxford University Press, number 9780198775409, June.
When requesting a correction, please mention this item's handle: RePEc:pre:wpaper:201334. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Rangan Gupta)
If references are entirely missing, you can add them using this form.